<div id="readability-page-1">Until last year, Fidelity International’s most significant cornerstone commitments on the Hong Kong initial public offering (IPO) market dated back to 2021, when Chinese short-video platform Kuaishou Technology raised US$5.4 billion and healthcare firm Medlive Technology completed a US$543.4 million listing. Then for the next four years, the asset manager went quiet. Late last year it returned to Chinese assets in force. It backed gold miner Zijin Gold International’s US$3.2 billion listing in September 2025, followed by crypto platform HashKey Group, snack retailer Busy Ming and pork giant Muyuan Foods. Fidelity’s comeback is not an isolated case. Heavyweight global investors such as BlackRock, Temasek and Qatar Investment Authority are reappearing in cornerstone books, signalling a shift in sentiment – and raising the question of what has changed in Hong Kong’s favour. “We have seen a robust comeback of international long-only investors – especially European and Middle Eastern sovereign funds – in Hong Kong’s IPO market, and we expect that momentum to carry into 2026,” said John Lee, vice-chairman and head of Greater China for global banking at UBS. The return is not limited to Europe and the Middle East, with US and Singapore-based funds also re-emerging as cornerstone backers in major listings, particularly across consumption, industrial and hi-tech sectors. “In 2023 and 2024, many international investors reduced China exposure altogether,” Lee said. “But the tone has definitely changed over the past 12 to 18 months, with a gradual return of investors adding back China weightings – a trend that became more pronounced by the middle of 2025.” The shift has been supported by improving sentiment towards consumption, clearer policy direction in technology and industrial upgrading, and growing confidence in the global competitiveness of Chinese companies, particularly in artificial intelligence and advanced manufacturing, he added. Hong Kong’s equity market delivered its strongest annual gains since 2017 last year, supported by improved liquidity and renewed risk appetite. Benchmarks outpaced several major developed-market indices, while valuations remained well below those of US peers. For investors such as Fidelity International, the move reflects a strong recalibration of risk appetite. “The Hong Kong IPO market today feels more anchored by companies listing for longer-term strategic reasons rather than short-term fundraising considerations,” said Tina Tian, portfolio manager at Fidelity International. From a risk-reward perspective, it felt like the right time to re-engage with Hong Kong, she added, noting that from both an issuer and investor perspective the quality and structure of the IPO pipeline had improved materially. “As global regulatory and geopolitical dynamics evolved, a Hong Kong IPO or secondary listing is increasingly seen as a way to broaden the investor base, enhance liquidity and maintain access to international capital within a familiar regulatory framework,” Tian said. The cornerstone investor has long been a steady feature of Hong Kong’s IPO market, offering much-needed ballast to a market prone to sharp swings. With early commitments to buy sizeable stakes and lock-up periods after listing, cornerstone funds anchor pricing, signal confidence and help stabilise deals before trading begins. Foreign capital accounted for about 27 per cent of all 353 cornerstone investors across the top 20 IPOs of 2025 and those priced up to February 3, this year, according to data compiled by the SCMP. Their presence has grown not only in headcount but also in investment size, with commitments noticeably larger than in 2022. “Large scale US funds are leaning into China’s consumption, infrastructure and industrial sectors,” a shift away from their earlier preference for property developers, said George Wu, partner at global law firm DLA Piper. The contrast in cornerstone investor profiles between recent and older deals is stark. When China Tourism Group Duty Free raised US$2.3 billion in August 2022, the year’s largest IPO in Hong Kong, its cornerstone line-up was dominated by state-backed funds, including China State-owned Enterprise Mixed Ownership Reform Fund and China Structural Reform Fund. Fast forward to last year, and the names tell a different story. Mainland Chinese soft drink maker Eastroc Beverage, which raised US$1.3 billion in the city’s largest IPO as of February 3, drew 16 cornerstone investors, including six global heavyweights such as sovereign wealth fund Qatar Investment Authority – the single largest cornerstone investor with US$150 million – alongside Temasek, BlackRock, Fidelity and JPMorgan Asset Management. BlackRock put US$35 million into snack retailer Busy Ming. In industrials, Oaktree and Jane Street joined BlackRock in backing machinery maker Sany Heavy Industry, while Jane Street also took a cornerstone stake in air-conditioning components supplier Zhejiang Sanhua Intelligent Controls. Middle Eastern sovereign wealth funds have been among the most active backers of China’s cutting-edge technology listings. Abu Dhabi Investment Authority was the largest cornerstone investor in AI start-up MiniMax with a US$65 million commitment and also led the cornerstone line-up in Shenzhen Edge Medical with US$15 million. Kuwait Investment Authority ranked among the biggest cornerstone investors in battery giant Contemporary Amperex Technology, pledging US$500 million. “The direction of private capital flows is driven mainly by financial returns,” Wu said. “But in certain sensitive tech areas, geopolitical and national security concerns inevitably discourage some investors from taking action.”     M&amp;G Investments, the London-based asset manager, was involved last year in the listings of logistics firm Jingdong Industrials and bubble tea chain Mixue Group as a cornerstone investor. “Our intention is to be long-term shareholders from the outset,” said Vikas Pershad, portfolio manager for Asian equities at M&amp;G Investments. “We see compelling opportunities in several areas: the renewables supply chain, scaled franchise-driven business models expanding domestically and internationally, technology platforms and logistics companies. “The common characteristics across these sectors are wide competitive moats, improving unit economics, robust balance sheets, long growth runways and valuations that remain discounted relative to global peers.” The share of IPO proceeds locked up by cornerstone investors also climbed between 2021 and 2026, with the portion of total funds rising to roughly 49 per cent from about 14 per cent, according to LSEG Data &amp; Analytics data. More than 270 global institutions acted as cornerstone investors in Hong Kong IPOs last year, while 40 listings included at least one international cornerstone backer, Hong Kong Exchanges and Clearing (HKEX) data showed. So far in 2026, cornerstone tranches have accounted for around half of the US$1.81 billion raised across 11 Hong Kong IPOs. For many global long-only investors, the renewed participation as cornerstone investors marks a clear break from the years when exposure to Chinese equities – and Hong Kong IPOs in particular – was sharply reduced or frozen altogether. “That said, state-linked capital helped companies bridge a difficult funding period and reach the IPO stage,” Wu said. “At the same time, local governments were advancing industrial upgrading amid property downturn and sluggish consumption, and companies urgently needed capital between 2022 and 2024. It was a very reasonable match.” “The direction of Chinese government capital flows is about supporting local industries, promoting employment and creating local social and economic value,” he added. Government-backed entities made up about 18 per cent of all cornerstone investors across the largest IPOs of 2025 and those priced up to February 3, this year. While Chinese government-linked investment vehicles have scaled back their overall share of cornerstone allocations during 2022 and 2024, they continue to anchor the country’s strategic sectors such as artificial intelligence, semiconductors, electric vehicles and new energy. Analysts said their holdings underscored China’s push to shift away from property-driven growth towards new economic engines. Several semiconductor and biotech deals this year saw meaningful government participation. For instance, cornerstone investors in OmniVision Integrated Circuits, GigaDevice Semiconductor and Shanghai Iluvatar CoreX Semiconductor all included state-linked funds. While state backing has supported demand in strategic sectors, the broader revival in cornerstone activity has been driven by the return of international investors alongside reforms introduced by Hong Kong’s bourse operator. HKEX, which runs Asia’s third-largest stock market with a capitalisation of about US$6.5 trillion, has in recent years introduced a series of listing changes aimed at widening the pipeline of issuers and expanding the base of institutional investors.   Its IPO allocation overhaul, effective August 4, guaranteed institutional investors at least 40 per cent of new shares through the bookbuilding tranche while cutting the potential clawback to the retail subscription pool to 35 per cent from 50 per cent under the old rules, a move aimed at reducing volatility in debut trading. The growing prevalence of so-called A+H listings and “return-to-Hong Kong” transactions has also meant that investors are increasingly engaging with companies that are already well researched and subject to regulatory oversight in other major markets, helping to rebuild confidence in deal quality. That shift has been reinforced by changes to the listing regime. Since 2018, HKEX has introduced Chapter 18A and, more recently, Chapter 18C to accommodate pre-revenue biotech and specialist technology companies, widening the pipeline of issuers and drawing fresh pools of capital. Johnson Chui, managing director and head of global issuer services at HKEX, said the increasingly diverse mix of participants in IPOs reflected investor confidence in Hong Kong as a resilient and internationally competitive capital-raising venue. “HKEX will continue to enhance its attractiveness to global investors,” he said. According to Peihao Huang, head of equity capital markets for Asia Pacific at J.P. Morgan, cornerstone investors were essential to issuers and banks in setting valuation parameters, identifying opinion-leading institutions and reducing execution risk and helping build momentum during book-building. She added that the presence of well-known international cornerstone investors often strengthened demand from other institutional and retail investors, as their participation was widely viewed as a validation of deal quality and valuation discipline. “Cornerstone participation has always been a defining feature of Hong Kong IPOs, but in this cycle it has become the new norm,” she said.</div>

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<p>Fidelity International and other global investors are returning to Hong Kong's IPO market, signaling a shift in sentiment. After a quiet period, Fidelity backed several major listings, including Zijin Gold International and HashKey Group. This resurgence is attributed to improving sentiment towards consumption, clearer policies in technology, and confidence in Chinese companies' competitiveness. The Hong Kong market has seen strong gains, with foreign capital making up 27% of cornerstone investors in top IPOs. The profile of these investors has shifted, with more global funds participating in recent deals, reflecting a recalibration of risk appetite.</p>

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The big cornerstone comeback: what’s driving investors back to Hong Kong IPOs?